11:46 AM EDT, 03/26/2025 (MT Newswires) -- Playtika ( PLTK ) management's reputation for operational excellence, combined with an all-time high next twelve months free cash flow yield of 21% and a dividend yield of 9%, suggests that the downside risk to the shares is limited, BofA Securities said in a note Wednesday.

The analysts said the recent drop in Playtika's ( PLTK ) stock price was caused by the exit of a major shareholder in a low-liquidity environment, concerns about the company's slow transition to growth, and investor preference for mobile advertising network assets over game publishers.

They added that Playtika ( PLTK ) has the highest profitability in its industry, the largest direct-to-consumer platform, and three of the biggest and longest-running franchises in mobile gaming.

The analysts are also increasing their 2025 forecast for bookings and earnings before interest, taxes, depreciation, and amortization to $2.85 billion and $740 million, respectively, based on data from January and February third-party sources.

Bofa noted that the company's guidance is "highly conservative" and implies a 6% year-over-year organic decline in 2025, which would be worse than the 5% year-over-year decline expected in 2024.

The analysts added they expect Playtika ( PLTK ) to improve its capital allocation in 2025, restarting growth in its leading franchises while also benefiting from the long tail of smaller games. Their forecast assumes that SuperPlay generates $465 million in bookings and that its existing portfolio declines by 5% year-over-year.

BofA Securities upgraded Playtika ( PLTK ) to buy from underperform and adjusted its price target to $6.50 from $6.

The analysts said that the valuation reflects challenges in mobile game development, the company's "solid" execution and efficiency, and uncertainties around its mergers and acquisitions strategy.

Price: 5.41, Change: +1.01, Percent Change: +22.95